Netflix CEO Reed Hastings has changed his tune on geo-blocking.Source:AFP

FOR nearly a year it seemed like it was little more than an empty threat.

But now Netflix is making good on a promise to shut-out non US customers from illegally accessing the country’s superior catalogue in a move that has set in motion a “blocking war” with far reaching consequences.

Netflix launched in Australia in March last year to much fanfare. However for some the excitement was diminished by the relatively small size of the catalogue that boasts about four times less content than its US counterpart.

It wasn’t long before many customers found a way around such a problem by circumventing the geo-blocking restrictions put in place by the streaming service.

Before it even entered the Australian market, a suspected 340,000 Aussies were using VPNs (virtual private networks) to access the US service — and soon that number swelled.

Initially, Netflix CEO Reed Hastings said it was all but impossible to stop such behaviour as the company seemed reluctant to deliberately upset paying customers, albeit dodgy ones. But after pressure from Hollywood studios and rights holders mounted on the world’s premier streaming service, a new set of battle lines were drawn and Aussie consumers have found themselves caught in the crossfire.

WILL NETFLIX BE ABLE TO WIN?

Earlier in the month, Netflix announced it was expanding its service to 190 countries. The move was closely following by the company trying to flex its muscle via a blog post penned by Netflix’s vice president of content, David Fullagar, on January 14.

“In coming weeks, those using proxies and unblockers will only be able to access the service in the country where they currently are,” he wrote. “We are confident this change won’t impact members not using proxies.”

Soon after, those who were employing the underhanded practice were greeted with a black screen and a small message when they tried to log into their Netflix account. The jig was up, or so it seemed.

It wasn’t long before unblocking services found a way around the new measures. Melbourne based company uFlix which charges Australians $2 a month to unblock the US catalogue (by making the customer’s IP address appear as though it’s originating from the US) was one of the first to publicly announce it had overcome the new geo-blocking regime, just days after it was implemented.

“Unless some sort of technology comes out that no one’s ever heard of before, pretty much anything implemented can be bypassed,” uFlix’s Peter Dujan told The Australian newspaper Thursday.

“As long as what we’re doing remains legal, there’s no issue.”

The issue of legality it a tricky one. While operating a VPN is completely legal, Melbourne entertainment copyright lawyer, Shaun Miller, said strictly speaking there is a legal argument that what these companies are offering breaks Australian copyright law.

“They’re aiding and abetting copyright infringement,” he told news.com.au. He said if legally challenged, such services could potentially be banned.

But for the time being, they continue to exist in a somewhat legal grey area, and are reaping the profits from obliging Aussie customers.

Like uFlix, many other rerouting services such as unblock-us.com were also quick to report a solution for its customers following the new measures by Netflix.

In an article in the days following the Netflix announcement, Australian branch of tech website LifeHacker said while things will become more difficult for those trying to illegally access the US catalogue, there will likely always be a way.

“It’s currently early days but expect more headaches for geo-dodgers in the weeks to come,” wrote Chris Jager.

Speaking to ABC radio, the global editor for the site, Alan Henry, said he believed Netflix was fighting a futile battle.

“They can make a good show of it,” he said. “They can block some of the big providers, they can say that they’re blocking a lot of people ... (But) the VPN providers that they’ll block will just go and get new IP addresses from someone else and then they’re back to square one.”

The litany of online guides from tech sites such as Gizmodo explaining how to get around the new measures is a testament not only to the high demand for the information but also to the apparent ease in which consumers are able to adjust and adapt.

IS NETFLIX EVEN SERIOUS ABOUT ENFORCING GEO-BLOCKING?

It’s by far the most convincing stance Netflix has taken on the issue but some have speculated that the company still isn’t totally committed to the cause.

“In my humble opinion I think it’s a bit of a PR exercise for Netflix,” Mr Miller told news.com.au. “I don’t think they’re serious. Netflix is making money out of this so why would they want to sabotage their own business.”

For example, there are potentially more stringent measures such as requiring payment on a US credit card — as opposed to PayPal or a Netflix giftcard — and the requirement of a confirmed US billing address that would force wrongdoers to go the extra mile in fooling the service.

“There’s an ulterior motive going on with Netfix,” Mr Miller said.

Netflix original series Making a Murderer has drawn many people to the service. Picture: AP Photo/Morry GashSource:AP

WHAT’S AT STAKE?

The stakes for winning what has been dubbed the “blocking war” are huge, and the outcome will have a dramatic impact on the environment of the billion dollar streaming industry.

If defiant Aussie consumers continue to find a way to access the US catalogue, movie studios and rights holders lose. But they’re not the only ones who stand to get the short end of the stick.

If Netflix (read: rights holders) lose the blocking war, it will make it much harder for local streaming services such as Stan and Presto to compete in the provincial market with potential customers flocking to the monolithic US version of Netflix.

It’s obviously “going to put downward pressure on Stan and Presto,” Mr Miller said. “I don’t think they’re very happy about people being able to go outside the Australian geo territory.”

If such a scenario proves impossible to stop, it will result in Australian companies, and arguably consumers, losing out in the long term.

It would also would mean a geographical based system of regional copyright laws would effectively be unenforceable, prompting the need for a serious reshaping of global copyright laws going forward.

“I do think it’s heading that way,” Mr Miller said. In terms of video on demand rights, he believes the landscape will shift towards a more globalised system of copyright ownership.

If everyone is accessing the US Netflix, “those rights would not be valuable on a territory by territory basis,” he said. “If it was all open slather, if someone buys the rights to a film, they’ll just have to buy it worldwide.”